The Initiative stimulates new ways of thinking about Business Models, Service Portfolios and Technical Architectures.

Created by boutique analyst and consulting company, STL Partners, the Telco 2.0™ Initiative was launched in May 2006 and is supported by the GSM Association, among other organisations around the world.

Since we launched the concept of the 'Two-Sided Telecoms Business Model', the approach has been finding increasing resonance at senior levels in both mature and fast growth markets.

Why does it exist?

Key challenges for strategists who work in or with the telecoms industry are:

Overall Strategy: How is the digital economy evolving, what are the best strategic responses and the most profitable market opportunities?

Voice and Messaging: How best to innovate core service offerings to add value and grow revenues?

Data and Broadband: How to ensure incentives and rewards are better aligned across the [digital content] value chain?

New Communications Services: How can latent telecoms capabilities be better exploited to address new market opportunities?

Conventional Answers are Unsatisfactory

Leading strategists now agree that today's predominant 'one-sided' telecoms business model does not provide sufficient answers to these questions, for telcos or for other players in the digital economy. Something new is needed.

Challenges to the Telecoms Industry

IP has changed the game and many growth markets are maturing rapidly. The lines between industries are blurring and everyone is after the same consumers. This is causing disruption in the telco industry, for operators and their partners. Greater levels of creativity are needed to address the following issues:

The vertically integrated Telecoms business model is under attack from all sides: tougher regulation, new technology (most notably VoIP and open spectrum), disintermediatory new entrants, and advancing customer expectations.

P/E ratios suggest little investor belief in this improving. They have low confidence in 'converged' or triple/quadruple-play bundles providing high returns.

Operators are making investment decisions in Network & IT, Products & Services, and Mergers & Acquisitions without a clear view of the future.

92% of respondents to an STL online survey replied that 're-thinking the strategic role of the operator' is a key priority.

85% of senior execs said the current telco business model will no longer deliver sufficient growth. (Telco 2.0 Survey, November 2008)

There is an urgent need for all players in the telecoms value chain to review and renew their business models.

The Opportunity

Fortunately telecom's companies possess a whole host of assets that could be exploited much more to support new, sustainable market growth. The key is for telcos to create open platforms that help other service providers (enterprises, SMEs and government) interact with end-users in more efficient ways than they can today.

Telco 2.0™ 'two-sided' telecoms business model

We call this the 'two-sided' telecoms business model, delivering value to and generating revenue from 3rd party service providers as well as end-users. The 'two-sided' business model has consequences for the design of existing services such as conventional voice, messaging and data/broadband products (e.g. see Voice & Messaging 2.0 "What to learn from - and how to compete with - Internet Communications Services") and also creates opportunities to create new revenues and B2B Platform Services.

Our analysis shows that in 10 years time this new business model could deliver up to 30% growth in annual revenues to operators and dramatically enhance the value of the industry to the wider 'digital economy' (Please see: Future Broadband Business Models "Beyond bundling: winning the new $250Bn delivery game" and The 2-Sided Telecoms Market Opportunity "Sizing the new $125Bn platform services opportunity")

To realise this ambition we need to re-think not only our organisational and technology structures, but also how we collaborate across a wider ecosystem.

How to get involved?

To start to explore the opportunities in more depth see our reports or attend one of our Executive Brainstorm events